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Imagine a Political Party That Really Supports Equal Rights – Real Heroes: William Leggett – Article by Lawrence W. Reed

Imagine a Political Party That Really Supports Equal Rights – Real Heroes: William Leggett – Article by Lawrence W. Reed

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The New Renaissance Hat
Lawrence W. Reed
July 10, 2015
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Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Death from yellow fever complications claimed journalist William Leggett at the tender age of 38, days before he would have assumed his first political office. President Martin Van Buren had just named Leggett US ambassador to Guatemala. In the early 19th century, as temptations were rising to divert Americans’ constitutional framework toward bigger government, Leggett (to borrow a phrase from 20th-century journalist William F. Buckley) stood athwart history yelling, “Stop!”

Leggett’s fame is inextricably intertwined with the term Locofoco. Here’s the story.

Imagine a political movement that says it’s committed to “equal rights” — and means it. Not just equality in a few cherry-picked rights but all human rights, including the most maligned: property rights. Imagine a movement whose raison d’être is to oppose any and all special privileges from government for anybody.

When it comes to political parties, most of them in recent American history like to say they’re for equal rights. But surely the first lesson of politics is this: what the major parties say and do are two different things.

In American history, no such group has ever been as colorful and as thorough in its understanding of equal rights as one that flashed briefly across the political skies in the 1830s and ‘40s. They were called “Locofocos.” If I had been around back then, I would have proudly joined their illustrious ranks.

The Locofocos were a faction of the Democratic Party of President Andrew Jackson, concentrated mostly in the Northeast and New York in particular, but with notoriety and influence well beyond the region. Formally called the Equal Rights Party, they derived their better-known sobriquet from a peculiar event on October 29, 1835.

Democrats in New York City were scrapping over how far to extend Jackson’s war against the federally chartered national bank at a convention controlled by the city’s dominant political machine, Tammany Hall. (Jackson had killed the bank in 1832 by vetoing its renewal.) When the more conservative officialdom of the convention expelled the radical William Leggett, editor of the Evening Post, they faced a full-scale revolt by a sizable and boisterous rump. The conservatives walked out, plunging the meeting room into darkness as they left by turning off the gas lights. The radicals continued to meet by the light of candles they lit with matches called loco focos — Spanish for “crazy lights.”

With the Tammany conservatives gone and the room once again illuminated, the Locofocos passed a plethora of resolutions. They condemned the national bank as an unconstitutional tool of special interests and an engine of paper-money inflation. They assailed all monopolies, by which they meant firms that received some sort of privilege or immunity granted by state or federal governments. They endorsed a “strict construction” of the Constitution and demanded an end to all laws that “directly or indirectly infringe the free exercise of equal rights.” They saw themselves as the true heirs of Jefferson, unabashed advocates of laissez-faire and of minimal government confined to securing equal rights for all and dispensing special privileges for none.

Three months later, in January 1836, the Locofocos held a convention to devise a platform and to endorse candidates to run against the Tammany machine for city office in April. They still considered themselves Democrats: rather than bolt and form a distinct opposition party, they hoped to steer the party of Jefferson and Jackson to a radical reaffirmation of its principled roots.

“We utterly disclaim any intention or design of instituting any new party, but declare ourselves the original Democratic party,” they announced.

The “Declaration of Principles” the Locofocos passed at that January gathering is a stirring appeal to the bedrock concept of rights, as evidenced by these excerpts:

  • “The true foundation of Republican Government is the equal rights of every citizen, in his person and property, and in their management.”
  • “The rightful power of all legislation is to declare and enforce only our natural rights and duties, and to take none of them from us.”
  • “No man has a natural right to commit aggression on the equal rights of another; and this is all the law should enforce on him.”
  • “The idea is quite unfounded that on entering into society, we give up any natural right.”

The convention pronounced “hostility to any and all monopolies by legislation,” “unqualified and uncompromising hostility to paper money as a circulating medium, because gold and silver are the only safe and constitutional currency,” and “hostility to the dangerous and unconstitutional creation of vested rights by legislation.”

From affirmative action to business subsidies, today’s Congress and state legislatures routinely bestow advantages on this or that group at the expense of others. The Locofoco condemnation of such special privilege couldn’t be clearer:

We ask that our legislators will legislate for the whole people and not for favored portions of our fellow-citizens, thereby creating distinct aristocratic little communities within the great community. It is by such partial and unjust legislation that the productive classes of society are … not equally protected and respected as the other classes of mankind.

William Leggett, whose expulsion from the October gathering by the Tammany Democrats sparked the Locofocos into being, was the intellectual linchpin of the whole movement. After a short stint editing a literary magazine called the Critic, he was hired as assistant to famed poet and editor William Cullen Bryant at the New York Evening Post in 1829. Declaring “no taste” for politics at first, he quickly became enamored of Bryant’s philosophy of liberty.

He emerged as an eloquent agitator in the pages of the Post, especially in 1834 when he took full charge of its editorial pages while Bryant vacationed in Europe. Leggett struck a chord with the politically unconnected and with many working men and women hit hard by the inflation of the national bank.

In the state of New York at the time, profit-making businesses could not incorporate without special dispensation from the legislature. This meant, as historian Richard Hofstadter explained in a 1943 article, that “men whose capital or influence was too small to win charters from the lawmakers were barred from such profitable lines of corporate enterprise as bridges, railroads, turnpikes and ferries, as well as banks.”

Leggett railed against such privilege: “The bargaining and trucking away of chartered privileges is the whole business of our lawmakers.” His remedy was “a fair field and no favor,” free-market competition unfettered by favor-granting politicians. He and his Locofoco followers were not anti-wealth or anti-bank, but they were vociferously opposed to any unequal application of the law. To Leggett and the Locofocos, the goddess of justice really was blindfolded. His relentless rebukes of what we would call today “crony capitalism” are well represented in this excerpt from an 1834 editorial:

Governments have no right to interfere with the pursuits of individuals, as guaranteed by those general laws, by offering encouragements and granting privileges to any particular class of industry, or any select bodies of men, inasmuch as all classes of industry and all men are equally important to the general welfare, and equally entitled to protection.

The Locofocos won some local elections in the late 1830s and exerted enough influence to see many of their ideas embraced by no less than Martin Van Buren when he ran successfully for president in 1836. By the middle of Van Buren’s single term, the Locofoco notions of equal rights and an evenhanded policy of a small federal government were reestablished as core principles of the Democratic Party. There they would persist for more than half a century after Leggett’s death, through the last great Democratic president, Grover Cleveland, in the 1880s and 1890s. Sadly, those essentially libertarian roots have long since been abandoned by the party of Jefferson and Jackson.

Upon Leggett’s untimely death in 1839, poet William Cullen Bryant penned an eloquent obituary in which he wrote, in part, the following tribute:

As a political writer, Mr. Leggett attained, within a brief period, a high rank and an extensive and enviable reputation. He wrote with great fluency and extraordinary vigor; he saw the strong points of a question at a glance, and had the skill to place them before his readers with a force, clearness and amplitude of statement rarely to be found in the writings of any journalist that ever lived. When he became warmed with his subject, which was not unfrequently the case, his discussions had all the stirring power of extemporaneous eloquence.

His fine endowments he wielded for worthy purposes. He espoused the cause of the largest liberty and the most comprehensive equality of rights among the human race, and warred against those principles which inculcate distrust of the people, and those schemes of legislation which tend to create an artificial inequality in the conditions of men. He was wholly free — and, in this respect his example ought to be held up to journalists as a model to contemplate and copy — he was wholly free from the besetting sin of their profession, a mercenary and time-serving disposition. He was a sincere lover and follower of truth, and never allowed any of those specious reasons for inconsistency, which disguise themselves under the name of expediency, to seduce him for a moment from the support of the opinions which he deemed right, and the measures which he was convinced were just. What he would not yield to the dictates of interest he was still less disposed to yield to the suggestions of fear.

We sorrow that such a man, so clear-sighted, strong minded and magnanimous has passed away, and that his aid is no more to be given in the conflict which truth and liberty maintain with their numerous and powerful enemies.

If you’re unhappy that today’s political parties give lip service to equal rights as they busy themselves carving up what’s yours and passing out the pieces, don’t blame me. I’m a Locofoco and a fan of William Leggett.

For further information, see:

Lawrence W. (“Larry”) Reed became president of the Foundation for Economic Education (FEE) in 2008. Prior to that, he was a founder and president for twenty years of the Mackinac Center for Public Policy in Midland, Michigan. He also taught Economics full-time and chaired the Department of Economics at Northwood University in Michigan from 1977 to 1984.

He holds a B.A. degree in Economics from Grove City College (1975) and an M.A. degree in History from Slippery Rock State University (1978), both in Pennsylvania. He holds two honorary doctorates, one from Central Michigan University (Public Administration—1993) and Northwood University (Laws—2008).

This article was originally published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.
Mandatory Vaccinations Can Be Compatible with Liberty – Article by Randal John Meyer

Mandatory Vaccinations Can Be Compatible with Liberty – Article by Randal John Meyer

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The New Renaissance HatRandal John Meyer
July 7, 2015
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We can take comfort that modern science can handle infectious diseases. Questionable studies such as reports linking vaccinations to autism have been debunked. Despite the empirically demonstrable efficacy of vaccines, some people have decided to forego vaccinations for themselves or for children under their custody. Accordingly, libertarians have been forced to examine their own tenets to evaluate whether compulsory vaccinations are compatible with the principles of individual freedom.

I believe they are.

A major pitfall for libertarians examining this question is the consideration of whether mandatory vaccinations are too paternalistic. But because vaccinations prevent harm to others with incidental paternalistic effects, I argue that they are justified. Because certain deadly diseases are communicable from human-to-human contact, transmission can be prevented by using medically safe vaccines.

Vaccines do not always and in every case protect individuals who receive them. Bacteria and viruses can mutate, preventing vaccines from conquering them. And, over time, a particular vaccine can become less effective. But when given to a large enough population and updated periodically to counter mutations, vaccines act like a computer firewall, protecting the entire population. And if a significant enough portion of the population chooses not to be vaccinated, then the whole population becomes more susceptible to an outbreak. Immunization of a critical proportion of the population in this manner is called “herd immunity.” Though it may seem paradoxical, it becomes important to ensure that the vast majority of people get immunized to prevent harm.

Libertarian philosophy holds that it is justifiable to prevent unauthorized harm of one individual against another. Accordingly, even libertarians who have adopted principles such as the nonaggression axiom or the harm principle can see that vaccination is a means of preventing harm. Moreover, even libertarians who follow a strict Rothbardian nonaggression principle consider the prospect of aggression to be indistinguishable from actual aggression. And this is reasonable: preventing imminent harm is as good as stopping present harm.

University of Arizona professor Joel Feinberg has argued that “it is always a good reason in support of legislation that it would probably be effective in preventing (eliminating or reducing) harm to persons other than the actor and there is probably no other means that is equally effective at no greater cost to other values.”

John Stuart Mill famously notes in On Liberty that “the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.”

The questions of whether the nonimmunized members of a population pose a risk to others — as well as the effectiveness of vaccinations in preventing that harm — turn on facts. To address such questions, let’s take a look at the disease that has lead to most of this recent controversy: measles.

If one imagines a community with an immunity rate of 96–99 percent for measles due to vaccination (and most states fall below this rate), it is statistically unlikely that there will be an outbreak of measles in this population due to herd immunity. When only 95 percent of the population is vaccinated, an outbreak is possible. When the percentage vaccinated falls below 90 percent, the rate of infection per 10,000 children more than doubles. If the rate falls low enough, we can expect pandemics. “Before mass vaccination was introduced, measles used to follow a cyclic pattern, with [epidemics occurring each] period of about 2 years in Europe and North America,” according to research by V.A.A. Jansen and N. Stollenwerk.

From 1840 through 1990, measles killed nearly 200 million people globally. But from 2000 through 2012, measles deaths decreased by 78 percent after the UN sponsored immunization. During this period, 68 percent of the populations of member countries were immunized to herd immunity levels. In the United States, the vaccination rate among infants was 91 percent, considerably below the 96–99 percent needed for herd immunity to be maintained. In fact, in some enclaves, such as the Orange County school district, the immunization rate dropped to 50–60 percent among kindergarteners. This failure to vaccinate, at least in part due to the existence of the state philosophical exemption from vaccination, allowed the measles outbreak to occur in 2015 in more than a dozen states.

No individual has the right to expose other individuals to that risk.

Alternatively, there is parallel argument from the libertarian principles regarding common defense. According to David Boaz in his updated book, The Libertarian Mind, “most libertarians” believe that “governments should exist … [to provide] national defense against external threats.” The entire human race is at war with microbes, such as viruses, and has undergone massive assaults. Examples include the bubonic plague, smallpox, and polio. Each day, an individual’s immune system destroys numerous potential pathogens. Liberty-restraint principles allow for collectivization of defense efforts against equally deadly foes: our immune systems are not alone in this. Vaccines are instruments of that ongoing war.

People should not be compelled to be vaccinated for noncommunicable diseases, of course, but we don’t want any of these serious pathogens to reemerge. Measles, mumps, rubella, and pertussis cases are all on the rise in the United States. Polio has returned in more than 10 countries; the World Health Organization believes it constitutes a global health emergency. Childhood vaccines save nearly $40 billion in direct and indirect costs, in addition to numerous lives.

It is important to note, as well, that compulsory vaccination can accomplish herd immunity by means short of forced procedures. On one level, the civil law could be used to hold nonvaccinated adults and the parents of nonvaccinated children financially liable with punitive damages for their role in any public health emergency. Exclusion from various types of public space or activities could be justified, yet enforcement would be difficult, if not impossible, particularly in urban areas. On a more restrictive level, the state could use the criminal law to impose fines on parents or declare that such action constitutes child neglect. Regardless, more extreme measures for noncompliant adults would only be appropriate if more restrictive means could not achieve herd immunity thresholds.

Thus, it can be argued that vaccination policy approaching infringement on individual and parental choice does not pose an issue per se with mainstream libertarian thought, given the narrowness of the means of vaccination (how little it imposes on the recipient’s liberty) and the degree of relatively certain harm to others that is thereby prevented.

The harm of nonvaccination for serious communicable diseases poses a significant enough risk for others to become infected that it justifies such small impositions on personal liberty. A policy of voluntary vaccination, or the granting of philosophical exceptions to the general vaccination requirement, causes much more potential harm than requiring people to get a vaccination does.

Randal John Meyer is a Research Fellow at Brooklyn Law School. Randal was born in Rochester, New York. He has a J.D. from Brooklyn Law School, where he was an articles editor on the Brooklyn Law Review, and he has a B.A. in General Philosophy and in Philosophy, Politics, and Law from SUNY Binghamton. He has been cited for his published work on constitutional law, terrorism, and civil liberties, which has appeared in the Brooklyn Law Review, New York Journal of Law and Liberty Blog, and Brooklyn Law Review Practicum.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Socialism Is War and War Is Socialism – Both Forms of Central Planning Are Reactionary, Not Progressive – Article by Steven Horwitz

Socialism Is War and War Is Socialism – Both Forms of Central Planning Are Reactionary, Not Progressive – Article by Steven Horwitz

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The New Renaissance Hat
Steven Horwitz
June 10, 2015
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“[Economic] planning does not accidentally deteriorate into the militarization of the economy; it is the militarization of the economy.… When the story of the Left is seen in this light, the idea of economic planning begins to appear not only accidentally but inherently reactionary. The theory of planning was, from its inception, modeled after feudal and militaristic organizations. Elements of the Left tried to transform it into a radical program, to fit into a progressive revolutionary vision. But it doesn’t fit. Attempts to implement this theory invariably reveal its true nature. The practice of planning is nothing but the militarization of the economy.”

—Don Lavoie, National Economic Planning: What Is Left?

Libertarians have long confounded our liberal and conservative friends by being both strongly in favor of free markets and strongly opposed to militarism and foreign intervention. In the conventional world of “right” and “left,” this combination makes no sense. Libertarians are often quick to point out the ways in which free trade, both within and across national borders, creates cooperative interdependencies among those who trade, thereby reducing the likelihood of war. The long classical liberal tradition is full of those who saw the connection between free trade and peace.

But there’s another side to the story, which is that socialism and economic planning have a long and close connection with war and militarization.

As Don Lavoie argues at length in his wonderful and underappreciated 1985 book National Economic Planning: What Is Left?, any attempt to substitute economic planning (whether comprehensive and central or piecemeal and decentralized) for markets inevitably ends up militarizing and regimenting the society. Lavoie points out that this outcome was not an accident. Much of the literature defending economic planning worked from a militaristic model. The “success” of economic planning associated with World War I provided early 20th century planners with a specific historical model from which to operate.

This connection should not surprise those who understand the idea of the market as a spontaneous order. As good economists from Adam Smith to F.A. Hayek and beyond have appreciated, markets are the products of human action but not human design. No one can consciously direct an economy. In fact, Hayek in particular argued that this is true not just of the economy, but of society in general: advanced commercial societies are spontaneous orders along many dimensions.

Market economies have no purpose of their own, or as Hayek put it, they are “ends-independent.” Markets are simply means by which people come together to pursue the various ends that each person or group has. You and I don’t have to agree on which goals are more or less important in order to participate in the market.

The same is true of other spontaneous orders. Consider language. We can both use English to construct sentences even if we wish to communicate different, or contradictory, things with the language.

One implication of seeing the economy as a spontaneous order is that it lacks a “collective purpose.” There is no single scale of values that guides us as a whole, and there is no process by which resources, including human resources, can be marshaled toward those collective purposes.

The absence of such a collective purpose or common scale of values is one factor that explains the connection between war and socialism. They share a desire to remake the spontaneous order of society into an organization with a single scale of values, or a specific purpose. In a war, the overarching goal of defeating the enemy obliterates the ends-independence of the market and requires that hierarchical control be exercised in order to direct resources toward the collective purpose of winning the war.

In socialism, the same holds true. To substitute economic planning for the market is to reorganize the economy to have a single set of ends that guides the planners as they allocate resources. Rather than being connected with each other by a shared set of means, as in private property, contracts, and market exchange, planning connects people by a shared set of ends. Inevitably, this will lead to hierarchy and militarization, because those ends require trying to force people to behave in ways that contribute to the ends’ realization. And as Hayek noted in The Road to Serfdom, it will also lead to government using propaganda to convince the public to share a set of values associated with some ends. We see this tactic in both war and socialism.

As Hayek also pointed out, this is an atavistic desire. It is a way for us to try to recapture the world of our evolutionary past, where we existed in small, homogeneous groups in which hierarchical organization with a common purpose was possible. Deep in our moral instincts is a desire to have the solidarity of a common purpose and to organize resources in a way that enables us to achieve it.

Socialism and war appeal to so many because they tap into an evolved desire to be part of a social order that looks like an extended family: the clan or tribe. Soldiers are not called “bands of brothers” and socialists don’t speak of “a brotherhood of man” by accident. Both groups use the same metaphor because it works. We are susceptible to it because most of our history as human beings was in bands of kin that were largely organized in this way.

Our desire for solidarity is also why calls for central planning on a smaller scale have often tried to claim their cause as the moral equivalent of war. This is true on both the left and right. We have had the War on Poverty, the War on Drugs, and the War on Terror, among others. And we are “fighting,” “combating,” and otherwise at war with our supposedly changing climate — not to mention those thought to be responsible for that change. The war metaphor is the siren song of those who would substitute hierarchy and militarism for decentralized power and peaceful interaction.

Both socialism and war are reactionary, not progressive. They are longings for an evolutionary past long gone, and one in which humans lived lives that were far worse than those we live today. Truly progressive thinking recognizes the limits of humanity’s ability to consciously construct and control the social world. It is humble in seeing how social norms, rules, and institutions that we did not consciously construct enable us to coordinate the actions of billions of anonymous actors in ways that enable them to create incredible complexity, prosperity, and peace.

The right and left do not realize that they are both making the same error. Libertarians understand that the shared processes of spontaneous orders like language and the market can enable all of us to achieve many of our individual desires without any of us dictating those values for others. By contrast, the right and left share a desire to impose their own sets of values on all of us and thereby fashion the world in their own images.

No wonder they don’t understand us.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Microaggressions and Microwonders – Are Mountains Out of Molehills Proof the World’s Getting Better? – Article by Steven Horwitz

Microaggressions and Microwonders – Are Mountains Out of Molehills Proof the World’s Getting Better? – Article by Steven Horwitz

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The New Renaissance Hat
Steven Horwitz
May 27, 2015
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A recurring theme of recent human history is that the less of something bad we see in the world around us, the more outrage we generate about the remaining bits.

For example, in the 19th century, outrage about child labor grew as the frequency of child labor was shrinking. Economic forces, not legislation, had raised adult wages to a level at which more and more families did not need additional income from children to survive, and children gradually withdrew from the labor force. As more families enjoyed having their children at home or in school longer, they became less tolerant of those families whose situations did not allow them that luxury, and the result was the various moral crusades, and then laws, against child labor.

We have seen the same process at work with cigarette smoking in the United States. As smoking has declined over the last generation or two, we have become ever less tolerant of those who continue to smoke. Today, that outrage continues in the form of new laws against vaping and e-cigarettes.

The ongoing debate over “rape culture” is another manifestation of this phenomenon. During the time that reasonably reliable statistics on rape in the United States have been collected, rape has never been less frequent than it is now, and it is certainly not as institutionalized as a practice in the Western world as it was in the past. Yet despite this decline — or in fact because of it — our outrage at the rape that remains has never been higher.

The talk of the problem of “microaggressions” seems to follow this same pattern. The term refers to the variety of verbal and nonverbal forms of communication that are said to constitute disrespect for particular groups, especially those who have been historically marginalized. So, for example, the use of exclusively masculine pronouns might be construed as a “microaggression” against women, or saying “ladies and gentlemen” might be seen as a microaggression against transsexuals. The way men take up more physical space on a train or bus, or the use of the phrase “walk-only zones” (which might offend the wheelchair-bound) to describe pedestrian crossways, are other examples.

Those who see themselves as the targets of microaggressions have often become very effective entrepreneurs of outrage in trying to parlay these perceived slights into indications of much more pervasive problems of sexism or racism and the like. Though each microaggression individually might not seem like much, they add up. So goes the argument.

I don’t want to totally dismiss the underlying point here, as it is certainly true that people say and do things (often unintentionally) that others will find demeaning, but I do want to note how this cultural phenomenon fits the pattern identified above. We live in a society in which the races and genders (and classes!) have never been more equal. Really profound racism and sexism is far less prominent today than it was 50 or 100 years ago. In a country where the president is a man of color and where one of our richest entertainers is a woman of color, it’s hard to argue that there hasn’t been significant progress.

But it is exactly that progress that leads to the outrage over microaggressions. Having steadily pushed back the more overt and damaging forms of inequality, and having stigmatized them as morally offensive, we have less tolerance for the smaller bits that remain. As a result, we take small behaviors that are often completely unintended as offenses and attempt to magnify them into the moral equivalent of past racism or sexism. Even the co-opting of the word “aggression” to describe what is, in almost all cases, behavior that is completely lacking in actual aggression is an attempt to magnify the moral significance of those behaviors.

Even if we admit that some of such behaviors may well reflect various forms of animus, there are two problems with the focus on microaggressions.

First, where do we draw the line? Once these sorts of behaviors are seen as slights with the moral weight of racism or sexism, we can expect to see anyone and everyone who feels slighted about anything someone else said or did declare it a “microaggression” and thereby try to capture the same moral high ground.

We are seeing this already, especially on college campuses, where even the mere discussion of controversial ideas that might make some groups uncomfortable is being declared to be a microaggression. In some cases this situation is leading faculty to stop teaching anything beyond the bland.

Second, moral equivalence arguments can easily backfire. For example, if we, as some feminists were trying to do in the 1980s, treat pornography as the equivalent of rape, hoping to make porn look worse, we might end up causing people to treat real physical rape less seriously given that they think porn is largely harmless.

So it goes with microaggressions: if we try to raise men taking up too much room on a bus seat into a serious example of sexism, then we risk people reacting by saying, “Well, if that’s what sexism is, then why should I really worry too much about sexism?” The danger is that when far more troubling examples of sexism or racism appear (for example, the incarceration rates of African-American men), we might be inclined to treat them less seriously.

It is tempting to want to flip the script on the entrepreneurs of microaggression outrages and start to celebrate their outrages as evidence of how far we’ve come. If men who take the middle armrest on airplanes (as obnoxious as that might be) are a major example of gender inequality, we have come far indeed. But as real examples of sexism and racism and the like do still exist, I’d prefer another strategy to respond to the talk of microaggressions.

Let’s spend more time celebrating the “microwonders” of the modern world. Just as microaggression talk magnifies the small pockets of inequality left and seems to forget the larger story of social progress, so does our focus on large social and economic problems in general cause us to forget the larger story of progress that is often manifested in tiny ways.

We live in the future that prior generations only imagined. We have the libraries of the world in our pockets. We have ways of easily connecting with friends and strangers across the world. We can have goods and even services of higher quality and lower cost, often tailored to our particular desires, delivered to our door with a few clicks of a button. We have medical advances that make our lives better in all kinds of small ways. We have access to a variety of food year-round that no king in history had. The Internet brings us happiness every day through the ability to watch numerous moments of humor, human triumph, and joy.

Even as we recognize that the focus on microaggressions means we have not yet eliminated every last trace of inequality, we should also recognize that it means we’ve come very far. And we should not hesitate to celebrate the microwonders of progress that often get overlooked in our laudable desire to continue to repair an imperfect world.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

The Pathway to Faster Cures – When It Comes to Life-Saving Drugs, We Need More Than Modest Reform – Article by Bartley J. Madden

The Pathway to Faster Cures – When It Comes to Life-Saving Drugs, We Need More Than Modest Reform – Article by Bartley J. Madden

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The New Renaissance Hat
Bartley J. Madden
May 26, 2015
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Rob Donahue used to ride horses. He was a modern-day cowboy until he was stricken with amyotrophic lateral sclerosis (ALS). Now his muscles are weak. He can’t ride horses anymore. And his condition is worsening quickly. ALS will degenerate Donahue’s neurons and nervous system, and he will probably die in less than five years.

Another ALS sufferer, Nick Grillo, is trying to change all that. He’s put together a petition on Change.org to urge the FDA to fast-track approval of a new drug, GM-604, that would help people like Donahue and others like him.

“People can’t wait five, ten, 15 years for the clinical trial process,” said Grillo. “Things need to happen much quicker.”

But ALS is just one illness, and GM-604 is just one medicine. There are thousands of Americans suffering — many with terminal illnesses — while waiting on the FDA approval process.

Paradigm change

A paradigm change is essential because FDA culture has led to a situation where it costs an average of $1.5 billion and 12 or more years of clinical testing to bring a new drug to market. Medical innovation cannot thrive when only very large firms can afford to research and develop new drugs.

Another problem is that the FDA’s first goal is not to maximize innovation, but to minimize the chances that an FDA-approved drug leads to unanticipated adverse side effects and negative publicity. In particular, the FDA’s efficacy testing requirements have resulted in an ever-increasing load of money and time on drug developers. We can’t count on FDA bureaucrats to fix the broken system they created.

Even Congress, whose cottage industry is to regulate, admits that the current FDA system is a roadblock to fast-paced innovation. Congress’s own 21st Century Cures Initiative has led to many good ideas for delivering medical treatments, but even if successful, these ideas would bring only incremental improvements.

Americans deserve a bold plan to achieve genuine large-scale change enabling us to live longer, healthier, and more productive lives. And most importantly, we need a mechanism for allowing patients to exercise choice consistent with their own preferences for risk.

Congressional hearings: the missing seat at the table

The missing seat at the table is for someone who represents freedom — that is, the right of patients, advised by their doctors, to make informed decisions as to the use of not-yet-FDA-approved drugs.

Freedom in response to suffering and subjugation is a powerful rallying call. The Women’s Right to Vote constitutional amendment in 1920 and the Civil Rights Act of 1964 were not about incremental improvements; each was a paradigm change that brought forth a different and better future.

Absent from the congressional hearings over health care, however, has been a freedom agenda, specifically one designed to eliminate the FDA’s monopoly on access to new drugs.

Venture capitalists, where have you gone?

We hear very little about those who suffer and die because they were not able to access drugs stuck in the FDA’s testing pipeline, or about drugs that were never brought to market because FDA procedures made the development costs too high. There is an invisible graveyard filled with people who have died because of drug lag and drug loss.

The FDA’s deadly over-caution is why venture capitalists shy away from investing in biopharmaceutical startup firms. Venture capitalists are willing to take big risks on ideas that may fail. But failure due to regulatory risk is just too big a hurdle to overcome. Capital providers have other opportunities, even if those opportunities don’t involve cures for disease.

High costs and slow innovation are the hallmark of a monopoly. And, as medical science continues its rapid pace of innovation, the cost of lost opportunities for better health will increase even faster. The solution is to introduce consumer choice and competition.

Free to choose medicine

Three self-reinforcing principles are needed to bring rapid innovation to the biopharmaceutical marketplace.

First, we need a free-to-choose track that operates independently of the FDA and runs alongside the conventional FDA clinical testing track — a competitive alternative. After a new drug has successfully passed safety trials and shows initial effectiveness in early clinical trials, a drug developer could request that the drug be available for sale. Such an arrangement would allow for new drugs to be available up to seven years earlier than waiting for a final FDA approval decision.

Second, free-to-choose treatment results, including patients’ genetic data, would be posted on an open-access database. Patients and their physicians would be able to make informed decisions about the use of approved drugs versus not-yet-approved drugs. The resulting treasure trove of observational data would reveal, in real time on the Internet, which subsets of patients do extremely well or poorly using a particular new drug. This broad population of users — in contrast to the tight similarity of clinical trial patients — would better inform the biopharmaceutical industry, yielding better R&D decisions and faster innovation.

Third, some drug developers would want to provide free-to-choose drugs in order to quickly demonstrate that their drugs were effective, thereby enhancing the ability to raise needed capital. For patients who need insurance reimbursement and for developers seeking formal FDA recognition of their drugs’ safety and effectiveness, another kind of incentive is needed. That is, FDA observational approval would be based on treatment results reflected in observational data posted on the open-access Internet database.

In the foreword to my 2012 book, Free to Choose Medicine: Better Drugs Sooner at Lower Cost, Nobel Laureate economist Vernon Smith wrote, “These three design components for patient/doctor control of medical treatment are both innovative and soundly based. With this conceptual blueprint, legislation could be crafted to promote both expanded consumer choice and the discipline of choice to the long-term benefit of society.”

Opposition

FDA proponents would bolster the fear that “unsafe” drugs could flood the marketplace. But the FDA cannot define what is “safe.” Only patients with their unique health conditions, treatment profiles, and preferences for taking risk can define what is safe for them. That is what freedom is all about: individual choice. Keep in mind that the likely large number of free-to-choose patients with widely varying health conditions would yield uniquely useful safety data superior to safety readouts from clinical trial data.

The free-to-choose medicine plan is voluntary and would not disturb those who want to use only approved drugs. A reasonable implementation schedule would first allow the new system to be used by patients fighting a life-threatening illness, as they are the ones most in need of access to the latest drug advancements.

Biopharmaceutical firms likely to oppose such a plan would include larger firms who consider their expertise in dealing with the FDA bureaucracy as an especially valued competitive advantage over their smaller competitors. We should expect support from firms with a high level of scientific skill, but limited skill and resources in dealing with FDA bureaucracy. Nevertheless, even those firms initially opposed should question their current business models, which produce sky-high prescription drug prices and the very real chance that government at some future point will impose price controls. Why not set into motion an alternative that can lead to radically lower development and approval costs with concomitant lower prescription drug prices while maintaining industry profitability levels?

Trial lawyer organizations will be expected to contribute mightily to defeat any freedom-based legislation. They do not want Americans legally taking personal responsibility by way of voluntary contracts, even if there are life-saving benefits to be had.

Patients are the ultimate beneficiaries of competition, and they are a powerful force for those who want a fundamental restructuring of the FDA. Right-to-try state laws are designed to allow those dealing with life-threatening illnesses access to not-yet-approved drugs. These laws’ enormous popularity indicates that a well-run campaign could generate similar support at the federal level for free-to-choose medicine.

Freedom should be part of the national debate on 21st century medical legislation. For that to happen, we need to give freedom lovers and chronic sufferers a seat at the table.

Every American should have the right to make informed decisions that can improve health or save lives. Freedom is not something to fear; it is the best route forward to a more innovative, efficient, and humane medical system.

Bartley J. Madden is a founder of Tomorrow’s Cures Today.  His website is www.LearningWhatWorks.com.
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This article was originally published by The Foundation for Economic Education.

Fantasy Bookstore Fights Fantasy Economics – San Francisco Sci-Fi Lovers Do Battle With the Minimum Wage – Article by Gary McGath

Fantasy Bookstore Fights Fantasy Economics – San Francisco Sci-Fi Lovers Do Battle With the Minimum Wage – Article by Gary McGath

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The New Renaissance Hat
Gary McGath
May 18, 2015
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Borderlands is an independent bookstore in San Francisco with an enthusiastic following among science fiction fans. It’s not just a place to buy books, but in the words of its mission statement “a social and professional center for readers, writers, publishers, reviewers, artists and other individuals with a strong interest in the fields of Science Fiction, Fantasy, Horror and Macabre Fiction.” Authors frequently appear there, and readers meet for discussions.

Like other bookstores, Borderlands has found staying in business difficult. It nearly closed early in 2015, and management put the blame for this on the city’s increase in the minimum wage. On February 1, it announced:

In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018.

Although all of us at Borderlands support the concept of a living wage in principal [sic] and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage.

Consequently we will be closing our doors no later than March 31st.  The cafe will continue to operate until at least the end of this year.

Thanks to sponsorship from its community, Borderlands was able to avoid closing and is still in business, at least for now. Still, its crisis graphically shows one of the damaging consequences of minimum wage laws.

If the cost of something goes up, people will buy less of it, or if they can’t, they’ll make up for it in some other way. This applies to employees as much as to anything else. Some businesses can raise their prices to meet increased labor costs, but books are a highly competitive market, and consumers are very sensitive to price changes.

Small businesses in general have fewer options. A large operation may be able to absorb the cost or find ways to pass it on. It can reduce hours, require extra duties, or replace people with machines. These options don’t work well when the staff is small and the love of what they’re doing is a big reason they stay there.

Borderlands is hardly a unique case. The management was careful not to take a position against the minimum wage, but zero dollars for unemployed workers isn’t a “living wage,” and it’s meaningless to say that putting low-wage employees out of work is “good for San Francisco.” It is individuals, not a city, who have to get food and a place to live.

A paid sponsorship program was the key to Borderlands’ short-term survival. Science fiction fans are heavily networked, and many work in well-paying jobs, so the store benefited from a community with money to spare.

Well-known authors like Seanan McGuire and Cory Doctorow helped publicize the cause. Borderlands deserves credit for its innovative approach, but other businesses aren’t always so lucky, and they will fold without being widely noticed or mourned. Fans of bookstores realized, perhaps too late, that for the industry to survive as a whole, the bookstore must be profitable as a business venture, rather than a charity case.

Minimum-wage increases aren’t magic money. Any cost increase has to come out of something, and low-paying jobs that can’t justify the increase are the first place they’ll come out of. Thinking it happens for free is just fantasy.

Gary McGath is a freelance software engineer living in Nashua, New Hampshire.

This article was originally published by The Foundation for Economic Education.
The Other Half of the Inflation Story: Credit Expansion Adds Noise to Price Signals – Article by Sanford Ikeda

The Other Half of the Inflation Story: Credit Expansion Adds Noise to Price Signals – Article by Sanford Ikeda

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Sanford Ikeda
May 7, 2015
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More money means higher prices. It’s too bad not everyone understands that connection. Even some economists don’t get it. Readers of the Freeman do, I’m sure. And they also understand why that’s a bad thing.

Increasing the supply of money and credit, other things equal, will cause a general rise in wages and prices across an economy. When the Federal Reserve, the central bank of the United States, excessively “prints money,” the result is “inflation” as it’s now commonly called. For those who get the new money after everyone else has spent theirs, inflation means incomes will now buy fewer goods, and every dollar lent before prices rose will be worth less when it’s returned.

If inflation continues, people will eventually learn to demand more for what they sell and lend in order to compensate for the purchasing power that inflation keeps eating away. That, in turn, will cause prices to rise faster, which makes planning for households and businesses even more difficult. In the past, that difficulty has led to hyperinflation and a breakdown of the entire economic system.

But as awful as all this may be, it’s really only half the story, and perhaps not even the worse half. What follows is a highly simplified story of what happens.

The structure of production

If you’d like to build a sturdy house, you’ll need to have some kind of blueprint or plan that will tell you two things:

  1. how the frame, floor, walls, roof, plumbing, and electrical system will all fit together; and
  2. the order in which to put these components together.

Even if the house was made entirely of identical stones, you would need to know how to fit them together to form the floor, walls, chimney, and other structural components. No two stones would serve exactly the same function in the overall plan.

The economy is like a house in the sense that each of its parts, which we might call “capital,” needs to mesh in a certain way if the eventual result will be order and not chaos. But there are two big differences between a house and an economy. The first is that the economy is not only much bigger, but it consists of a multitude of “houses” or private enterprises that have to fit together or coordinate, and so it’s an unimaginably more complex phenomenon than even the most elaborate house.

The second major difference is that a house is consciously constructed for a purpose, typically for someone to live in it. But an economic system is neither consciously designed by anyone nor intended to fulfill any particular purpose, other than perhaps to enable countless people with plans to do the best they can to achieve success. It’s a spontaneous order.

The way all the pieces of capital, from all the diverse people in the economy who own them, fit together is called the capital structure of production.

Credit expansion distorts the structure of production

When people decide to spend a certain portion of their incomes on consumption today, they are at the same time deciding to save some portion for consumption for the future. The amount that they save then gets lent out to borrowers and investors in the market for loanable funds. The rate of interest is the price of making those transactions across time. That is, when you decide to increase your saving, other things equal, the rate of interest (what some economists call the “natural rate of interest”) will fall. The falling interest rate makes borrowing more attractive to producers who invest today to produce more goods in the future.

That’s great, because when the market for loanable funds is operating freely without distortions, that means when people who saved today try to consume more in the future, there actually is more in the future for them to consume . Businesses today invested more at the lower rates precisely in order to have more to sell in the future when consumers want to buy more.

Now, if the Federal Reserve prints more money and that money goes into the loanable funds market, that will also increase the supply of loans and lower the interest rate and induce more borrowing and investment for future output. The difference here is that the supply of loans increases not because people are saving more now in order to consume more in the future, but only because of the credit expansion. That means that in the future, when businesses have more goods to sell, consumers won’t be able to buy them (because they didn’t save enough to do so) at prices that will cover all of the businesses’ costs. Prices will have to drop in order for markets to clear. Sellers suffer losses and workers lose their jobs.

And, oh yes, all that credit expansion also causes inflation.

While this process sounds rather involved, it’s still a highly simplified version of what has come to be known as the Austrian business cycle theory. (For a more advanced version, see here.) Of course, each instance in reality is significantly different from any other, but the narrative is essentially the same: credit expansion distorts the structure of production, and resources eventually become unemployed.

The explanation is more involved than the typical inflation-is-bad story that we’re more familiar with. Indeed, that probably explains why it’s the less-well-known half of the story. Even Milton Friedman and the monetarists pay little attention to the capital structure, choosing instead to focus on the problems of inflationary expectations.

Again, for Austrians, the problem arises when credit expansion artificially lowers interest rates and sets off an unsustainable “boom”; the solution is when the structure of production comes back into alignment with people’s actual preferences for consumption and saving, which is the “bust.” Most modern macroeconomists see it exactly the opposite way: the bust is the problem, and the boom is the solution.

An intricate, dynamic jigsaw puzzle

To close, I’d like to use an analogy I learned from Steve Horwitz (whom I heartily welcome back as a fellow columnist here at the Freeman).

The market economy is like a giant jigsaw puzzle in which each piece represents a unique unit of capital. When the system is allowed to operate without government intervention, the profit-and-loss motive tends to bring the pieces together in a complementary way to form a harmonious mosaic (although in a dynamic world, it couldn’t achieve perfection).

Credit expansion, then, is like someone coming along and making too many of some pieces and too few of others — and then, during the boom, trying to force them together, severely distorting the overall picture. During the bust, people realize they have to get rid of some pieces and try to discover where the others actually fit. That requires challenging adjustments and may take some time to accomplish. But if the government tries to “help” by stimulating the creation of more superfluous pieces, it will only confuse matters and make the process of adjustment take that much longer.

Inflation is bad enough. Unfortunately, it’s only half the story.

Sanford Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

This article was originally published by The Foundation for Economic Education.

Meaningful and Vacuous “Privilege” – Article by G. Stolyarov II

Meaningful and Vacuous “Privilege” – Article by G. Stolyarov II

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G. Stolyarov II
December 3, 2013
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Sanford Ikeda’s concise and insightful lists of 14 common fallacies about the free market (available in two installments from The Freeman here and here) motivate careful thought about the commonly used and misused term “privilege” and the conflations in which it can result. In discussing the second fallacy regarding the free market, that it is identical to a system where the government grants special privileges to businesses, Dr. Ikeda writes that “People sometimes define ‘privilege’ as any advantage a person or group may have over others. Certainly such advantages exist today and would exist in a free market—you may be born into a wealthy family or have superior drive and resourcefulness—but these advantages are consistent with the absence of privilege in the libertarian sense, as long as you acquired such advantages without fraud or the initiation of physical violence against the person or property of others.”

Indeed, the increasingly common usage of the term “privilege” to mean any advantage whatsoever eviscerates it of any genuine meaning it once had. This problem in today’s discourse spreads far beyond discussions of connections between businesses and governments.

Certainly, the very fact that one individual is different from another – with a different set of experiences, different physique, different knowledge, and even different standing room at any particular time – provides that individual with opportunities that the other lacks, while rendering him or her limited in ways that the other is not. Unfortunately, this trivial fact is increasingly being misconstrued in some circles to suggest vile inequities arising out of innocuous human differences. People who have not aggressed against, or even demeaned or ridiculed, anyone are increasingly being identified as “privileged” simply for belonging to broadly and crudely defined groups – be it all people of European descent, all males, or even all non-overweight people (witness the pseudo-concept of “thin privilege”) or people who are not disabled. (“Ableism” is apparently an emerging sin in the vocabulary of the increasingly militant and vitriolic collectivistic “social justice” movement – which is about neither true individual-oriented justice nor the preservation of a civilized and tolerant society.)  Such a vacuously expansive view of privilege is a tremendous insult to the true victims of coercive privilege throughout history – from slaves in all eras, to women who in prior eras were denied suffrage and property rights, to the freethinkers and forbears of liberty and reason, whose voices were too often snuffed out by the arbitrary power of absolute monarchs and theocrats in the pre-Enlightenment world.

Thomas Jefferson, an opponent of privilege in its meaningful sense, put it best when he expressed in his 1826 letter to Roger C. Weightman “the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride legitimately, by the grace of god.” Jefferson was a staunch opponent of the coercive privilege that enabled some to gain artificial advantages by restricting others from pursuing life-improving courses of action. Accidents of birth, or special lobbying skills, should not, in a just system, enable a person to acquire prerogatives which could not be earned through the free, peaceful exercise of that person’s abilities. Jefferson saw the future and strength of the American republic in the hoped-for emergence of a “natural aristocracy of talent and virtue” – people who, when allowed the liberty to flourish through honest work and competition, would become role models for others solely through their examples. This natural aristocracy would not need force to maintain its prominence, because the traits of the most knowledgeable, most industrious, and most virtuous people will be emulated by any who earnestly seek to improve their own lives and who have the freedom to acquire knowledge and make their own decisions.

Yet Jefferson’s natural aristocracy would be denounced as an example of horrid “privilege” by the “social justice” types – simply due to the necessarily unequal distribution of outcomes on a free market of open and honest production, competition, and cooperation. After all, not everyone can originate the same ideas at the same time. Not everyone can take advantage of the same opportunity for entrepreneurial profit, whose attainment, as economist Israel Kirzner demonstrated in Competition and Entrepreneurship, arises out of alertness to opportunities that others have missed. Kirzner writes that “Because the participants in [a] market are less than omniscient, there are likely to exist, at any given time, a multitude of opportunities that have not yet been taken advantage of. Sellers may have sold for prices lower than the prices which were in fact obtainable… Buyers may have bought for prices higher than the lowest prices needed to secure what they are buying…” (43). Would it be an example of unacceptable “privilege” for an alert entrepreneur to remedy such an arbitrage opportunity and thereby bring otherwise-unrealized value to consumers?

Yes, the free exercise of human abilities will produce outcomes where some people will have some advantages over some others (while, of course, leaving fully open the possibility that those very others will have their own distinct advantages, obtained through hard work, knowledge, or sheer luck). But, as long as coercion is not involved in securing and maintaining those advantages, the people endowed with them are not “booted and spurred” to ride the rest of us. As Dr. Ikeda points out, the differences among people are a source of strength harnessed by the free market: “The free market gives you an incentive to profit from associating with and learning from others who might be very different from you, who operate outside your normal social networks.” By incentivizing and facilitating these interactions, the free market encourages greater tolerance, understanding, and visible societal heterogeneity of the sort that constitutes the best safeguard against truly heinous oppressions based on collectivistic stereotypes. Instead of condemning others as being too “privileged” simply on account of innocuous differences, it is far more productive to think about how those differences can help one achieve one’s own values through honest, peaceful, and productive interaction, cooperation, and exchange.